FX.co ★ Bitcoin: FTX dramatic spiral unwinds. going for $13,000?

The drama in the cryptocurrency market continues. Binance has abandoned plans to buy FTX after failing to resolve the problems of the rival crypto exchange founded by Sam Bankman-Freed.

Against this backdrop, bitcoin losses in 24 hours increased to 14.41% compared to a collapse of almost 10% on Tuesday.

The nearest support level after the June lows has been reached, and now the price of BTCUSD is testing the $16,000 mark.

If the situation does not take an unexpectedly positive turn now, which is unlikely, this level is unlikely to hold. And this means that the main cryptocurrency may continue to fall to the $13,000 area.

FTX not tested

The day before, Changpeng Zhao, CEO and co-founder of Binance, said that FTX had approached his company for help amid a "significant liquidity crisis."

"As a result of corporate due diligence, as well as the latest news about the misuse of customer funds and the alleged investigations of the US agency, we have decided that we will not proceed with the potential acquisition of FTX.com," Binance said in a statement.

"Initially, we hoped we could support FTX clients to provide liquidity, but the issues are beyond our control or ability to help," Binance said.

Binance has conducted due diligence on FTX in accordance with a non-binding letter of intent regarding the purchase.

Before negotiating a deal with Binance, FTX sought help from other major exchanges Coinbase and OKX, but the offer was rejected.

Cryptocurrency investors continue to closely monitor developments related to FTX, the digital asset empire run by Bankman-Freed, which is split into FTX, a cryptocurrency exchange, and Alameda Research, a cryptocurrency trading firm.

Justin Sun to the rescue

Several crypto assets associated with Tron founder Justin Sun, including Tron (TRX), Just (JST), Sun (SUN), BitTorrent Token (BTT), and Huobi Token (HT), have resumed trading on the FTX cryptocurrency exchange.

Sun made the announcement in a November 10 tweet, adding that his team is working on a cashout feature.

Meanwhile, only TRX can be withdrawn on FTX, as other TRON tokens can only be traded. This means that users who want to exit FTX must convert their holdings to TRX.

TRX trades on FTX at a higher rate than other exchanges. At press time, TRX is up 13% on FTX to $0.06. In comparison, TRX is trading on KuCoin for around $0.056 and Binance CryptoSlate data shows the token is down 10% in the last 24 hours.

The FTX website still states that it cannot process withdrawals at the time of release.

Sun is working on a "solution" for FTX

Sun stated that the resumption of trading was "only an initial step towards a comprehensive solution that is being created to resuscitate and return to normal life for all FTX users."

The Tron founder originally tweeted that he was working on a solution with the crypto exchange to "initiate the path forward," and Sam Bankman-Fried retweeted the statement.

He noted that "the ongoing liquidity crisis, despite its short-term nature, is detrimental to both the development of the industry and investors."

In a separate post, Huobi and Tron DAO announced that they will support the 1:1 TRON token exchange on the FTX platform even if the withdrawal fails.

Users were asked to fill out a Google form to provide information about the TRON tokens they hold on the struggling cryptocurrency platform.

Regulators stepped up

We already discussed why the FTX drama is bad for the crypto market. Supervisory authorities also understand this.

A massive liquidity crisis on the FTX exchange has sparked calls for clear regulation of the US crypto market. On Wednesday, November 9, the US Securities and Exchange Commission (SEC) launched an investigation into FTX's transactions with client funds.

The US Securities and Exchange Commission is investigating whether FTX misused client funds, according to a Bloomberg report. In addition, they are also looking into FTX's relationships with other Sam Bankman-Freed firms, including Alameda Research.

The liquidity crisis has put FTX on the brink. His own FTX cryptocurrency token (FTT) has collapsed, shattering the market value by more than $3 billion.

Along with the SEC, the US Commodity and Futures Trading Commission (CFTC) is also monitoring developments on FTX. People familiar with the matter said that the SEC launched an investigation into FTX US a few months ago, investigating its crypto lending activities. In addition, US regulators are also looking into Sam Bankman-Fried's trading house Alameda Research.

Recent events have also caught the attention of lawmakers. US Senator Elizabeth Warren wrote:

"The collapse of one of the largest crypto platforms shows how much of the industry looks like smoke and mirrors. We need more aggressive enforcement, and I will continue to push for the SEC to enforce the law for consumer protection and financial stability."

The jurisdiction of the CFTC in the crypto space is currently limited to derivatives. However, the agency can take enforcement action in case of fraud and manipulation in the crypto space.

On the other hand, the SEC claims to oversee digital assets that, under the rule, may qualify as securities.

In recent days, both regulators have requested ownership details from FTX.com and FTX US. They are looking into whether there is any overlap in governance, board structures, or any financial relationship between the two organizations. The agencies also requested details on whether the two organizations' customer accounts were separated.

The CFTC has also raised concerns about the mishandling of customer assets by cryptocurrency trading platforms.

The FTX crisis has affected the entire crypto space. The crypto market as a whole has lost almost $200 billion in less than a week since the FTX crisis began.